scholarly journals Managerial Controls in Private Family Firms: The Influence of a Family’s Decision Premises

2021 ◽  
Vol 13 (4) ◽  
pp. 2158
Author(s):  
Daniel Magalhães Mucci ◽  
Ann Jorissen ◽  
Fabio Frezatti ◽  
Diógenes de Souza Bido
Keyword(s):  
Family Involvement ◽  
Family Business ◽  
Family Firms ◽  
Firm Behavior ◽  
Family Firm ◽  
Single Family ◽  
The Family ◽  
Family Involvement In Management ◽  
Formal Controls ◽  
New System

In most studies, the affiliation of the manager (family-affiliated or non-family affiliated) and supposedly related behavior (agent or steward) is considered the sole antecedent to explain a family business’ (non) professionalization of managerial controls. This paper, based on Luhmann’s new system theory, examines whether a family’s decision premises influence the design of managerial controls in family firms in addition to a manager’s family affiliation status. Using survey data of 135 large and medium-sized Brazilian family firms and testing the hypotheses with SEM, this study provides evidence that a family’s decision premises significantly influence the design of managerial controls in family firms. This study provides evidence that when a family’s intention to transfer the firm to next generation (TGO) is high, more formal controls, as well as controls of a more participative nature are adopted in a family firm. Moreover, the results do not indicate that the level of family involvement in management affects the design of controls in firms with high TGO. The results only showed a significant relationship between a family’s intention to control and influence (FCI) the firm and the absence of participative controls. In addition, these findings also illustrate that each single family-induced decision premise has the potential to explain family firm behavior, since each of the two premises considered in our study is related to a different design of the controls adopted by the family firm.

Does family involvement matter post IPO? Adding value through advertising in family firms

2018 ◽  
Vol 8 (3) ◽  
pp. 218-234 ◽  
Author(s):  
Atanas Nik Nikolov ◽  
Yuan Wen
Keyword(s):  
Firm Performance ◽  
Family Involvement ◽  
Family Business ◽  
Family Firms ◽  
Family Firm ◽  
Family Businesses ◽  
Publicly Traded ◽  
Content Type ◽  
The Public ◽  
The Family

PurposeThis paper brings together research on advertising, family business, and the resource-based view (RBV) of the firm to examine performance differences between publicly traded US family vs non-family firms. The purpose of this paper is to understand the heterogeneity of family vs non-family firm advertising after such firms become publicly traded.Design/methodology/approachThe authors draw on the RBV of the firm, as well as on extensive empirical literature in family business and advertising research to empirically examine the differences between family and non-family firms in terms of performance.FindingsUsing panel data from over 2,000 companies across ten years, this research demonstrates that family businesses have higher advertising intensity than competitors, and achieve higher performance returns on their advertising investments, relative to non-family competitors. The results suggest that the “familiness” of public family firms is an intangible resource that, when combined with their advertising investments, affords family businesses a relative advantage compared to non-family businesses.Research limitations/implicationsFamily involvement in publicly traded firms may contribute toward a richer resource endowment and result in creating synergistic effects between firm “familiness” and the public status of the firm. The paper contributes toward the RBV of the firm and the advertising literature. Limitations include the lack of qualitative data to ground the findings and potential moderating effects.Practical implicationsUnderstanding how family firms’ advertising spending influences their consequent performance provides new information to family firms’ owners and management, as well as investors. The authors suggest that the “familiness” of public family firms may provide a significant advantage over their non-family-owned competitors.Social implicationsThe implications for society include that the family firm as an organizational form does not need to be relegated to a second-class citizen status in the business world: indeed, combining family firms’ characteristics within a publicly traded platform may provide firm performance benefits which benefit the founding family and other stakeholders.Originality/valueThis study contributes by highlighting the important influence of family involvement on advertising investment in the public family firm, a topic which has received limited attention. Second, it also integrates public ownership in family firms with the family involvement–advertising–firm performance relationship. As such, it uncovers a new pathway through which the family effect is leveraged to increase firm performance. Third, this study also contributes to the advertising and resource building literatures by identifying advertising as an additional resource which magnifies the impact of the bundle of resources available to the public family firm. Fourth, the use of an extensive panel data set allows for a more complex empirical investigation of the inherently dynamic relationships in the data and thus provides a contribution to the empirical stream of research in family business.

Understanding Family Firm Profitability Heterogeneity

2020 ◽  
pp. 305-329 ◽  
Author(s):  
María J. Martínez-Romero ◽  
Rubén Martínez-Alonso ◽  
Alfonso A. Rojo-Ramírez ◽  
Julio Diéguez-Soto
Keyword(s):  
Family Involvement ◽  
Family Firms ◽  
Firm Heterogeneity ◽  
Family Firm ◽  
Research Field ◽  
The Family ◽  
Firm Profitability ◽  
Strategic Element ◽  
Family Involvement In Management ◽  
Positive Effect

Understanding family firm heterogeneity has become a topic of critical importance among academics and practitioners in the family business research field. This chapter aims to provide new insights into this theme by examining the differences in profitability within the pool of family firms. Furthermore, this chapter introduces an exceptional strategic element, namely innovative effort, to analyse when and to what extent the deployed innovative effort influences the family involvement in management-firm profitability relationship. Using a panel dataset on 3,164 observations of Spanish private manufacturing firms over the 2000–2015 period, the findings reveal significant differences in the profitability of family firms depending on the degree of family involvement in the firm's management. The findings also show that innovative effort reinforces the positive effect that family involvement in management exerts on firm profitability.

Understanding family firm innovation heterogeneity

2016 ◽  
Vol 6 (2) ◽  
pp. 103-121 ◽  
Author(s):  
Zonghui Li ◽  
Joshua J. Daspit
Keyword(s):  
Family Involvement ◽  
Family Business ◽  
Family Firms ◽  
Firm Heterogeneity ◽  
Family Firm ◽  
Firm Innovation ◽  
Content Type ◽  
Business Studies ◽  
The Family ◽  
Innovation Strategies

Purpose – In family business studies, inconsistent findings exist regarding the relationship between family involvement and firm innovation. The purpose of this paper is to understand the heterogeneity of family firm innovation. Design/methodology/approach – The authors draw on governance literature and the socioemotional wealth (SEW) perspective to examine how the extent of family governance and the type of SEW objectives jointly influence innovation strategies in family firms. Findings – The authors develop a typology of family firm innovation strategies, positing that the family firm’s risk orientation, innovation goal, and knowledge diversity vary depending on the degree of family involvement in governance and the type of SEW objective. The authors propose that four family firm innovation strategies (e.g. Limited Innovators, Intended Innovators, Potential Innovators, and Active Innovators) emerge when family involvement in the dominant coalition (high or low) is contrasted with the SEW objective (restricted or extended) pursued by the family. Practical implications – Understanding how governance and SEW goals work together to influence the firm’s innovation strategies is potentially valuable for managers of family firms. The authors offer practical suggestions for how to strategically reposition the firm to pursue innovation strategies more in line with those of the Active Innovator. Originality/value – This study contributes to the family business literature by using a multi-dimensional approach to examine family firm heterogeneity. In addition, by articulating various family firm innovation strategies, the authors offer insight into the previously inconsistent findings concerning firm innovation behavior and outcomes in family business studies.

The effects of goals attainment on CEO-owner satisfaction and the role of family involvement

2019 ◽  
Vol 10 (2) ◽  
pp. 116-127
Author(s):  
Ondřej Machek ◽  
Jiří Hnilica
Keyword(s):  
Family Involvement ◽  
Family Business ◽  
Firm Value ◽  
Family Firms ◽  
Hierarchical Regression ◽  
Content Type ◽  
Business Goals ◽  
Growth Increase ◽  
The Family ◽  
Owner Satisfaction

Purpose The purpose of this paper is to examine how the satisfaction with economic and non-economic goals achievement is related to the overall satisfaction with the business of the CEO-owner, and whether family involvement moderates this relationship. Design/methodology/approach Based on a survey among 323 CEO-owners of family and non-family businesses operating in the Czech Republic, the authors employ the OLS hierarchical regression analysis and test the moderating effects of family involvement on the relationship between the satisfaction with different goals attainment and the overall satisfaction with the business. Findings The main finding is that family and non-family CEO-owner’s satisfaction does not differ significantly when economic goals (profit maximisation, sales growth, increase in market share or firm value) and firm-oriented non-economic goals (satisfaction of employees, corporate reputation) are being achieved; both classes of goals increase the overall satisfaction with the firm and the family involvement does not strengthen this relationship. However, when it comes to external non-economic goals related to the society or environment, there is a significant and positive moderating effect of family involvement. Originality/value The study contributes to the family business literature. First, to date, most of the studies focused on family business goals have been qualitative, thus not allowing for generalisation of findings. Second, there is a lack of evidence on the ways in which family firms integrate their financial and non-financial goals. Third, the authors contribute to the literature on the determinants of personal satisfaction with the business for CEOs, which has been the focus on a relatively scarce number of studies.

“We are a family firm”

2018 ◽  
Vol 8 (1) ◽  
pp. 2-21 ◽  
Author(s):  
Claudia Binz Astrachan ◽  
Isabel C. Botero
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Family Firm ◽  
Business Owners ◽  
Public Companies ◽  
Content Type ◽  
Brand Building ◽  
Depth Interview ◽  
The Family ◽  
Family Associations

Purpose Evidence suggests that some stakeholders perceive family firms as more trustworthy, responsible, and customer-oriented than public companies. To capitalize on these positive perceptions, owning families can use references about their family nature in their organizational branding and marketing efforts. However, not all family firms actively communicate their family business brand. With this in mind, the purpose of this paper is to investigate why family firms decide to promote their “family business brand” in their communication efforts toward different stakeholders. Design/methodology/approach Data for this study were collected using an in-depth interview approach from 11 Swiss and German family business owners. Interviews were transcribed and coded to identify different themes that help explain the different motives and constraints that drive their decisions to promote the “family business brand.” Findings The analyses indicate that promoting family associations in branding efforts is driven by both identity-related (i.e. pride, identification) and outcome-related (e.g. reputational advantages) motives. However, there are several constraints that may negatively affect the promotion of the family business brand in corporate communication efforts. Originality/value This paper is one of the first to explore why family businesses decide to communicate their “family business brand.” Building on the findings, the authors present a conceptual framework identifying the antecedents and possible consequences of promoting a family firm brand. This framework can help researchers and practitioners better understand how the family business nature of the brand can influence decisions about the company’s branding and marketing practices.

scholarly journals Family Involvement in the Firm and Exports in the Family SME: Is the Manager’s International Orientation Influential?

2015 ◽  
Vol 7 (3) ◽  
pp. 69-99 ◽  
Author(s):  
Sami Basly
Keyword(s):  
Family Involvement ◽  
Family Firms ◽  
Positive Influence ◽  
International Orientation ◽  
The Family ◽  
Sample Data ◽  
Family Smes ◽  
Family Involvement In Management ◽  
The Relationship

AbstractDoes the family involvement affect exports in the family firm? The literature seems to support this view even if the direction and magnitude of this impact remains controversial. Drawing on the perspectives of agency [Chrisman et al. 2004; Schulze et al. 2001] and stewardship as applied to family firms [Davis, Schoorman and Donaldson 1997] and also on socio-emotional wealth perspective [Gómez-Mejía et al. 2007], this study seeks to contribute to this debate by studying the influence of family involvement on the SME exports intensity. To reconcile the divergent views, our research attempts to assess the role of the manager’s international orientation as a variable moderating the relationship between family involvement and exports in SMEs. Based on a hypothetical-deductive approach, the study uses a sample data of 125 family SMEs obtained through a questionnaire. The results show that even if the positive influence of the manager’s international orientation is corroborated, its moderating role seems to be limited to only one facet of the construct of family involvement i.e. involvement in management. Moreover, owning-family involvement in management seems to negatively influence exports while some results argue for a positive effect of the family involvement in ownership on exports.

scholarly journals How Family, Business, and Community Logics Shape Family Firm Behavior and “Rules of the Game” in an Organizational Field

2015 ◽  
Vol 28 (4) ◽  
pp. 292-311 ◽  
Author(s):  
Trish Reay ◽  
Peter Jaskiewicz ◽  
C. R. (Bob) Hinings
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Firm Behavior ◽  
Institutional Logics ◽  
Family Firm ◽  
Western Canada ◽  
Organizational Field ◽  
Different Types ◽  
Institutional Contexts ◽  
Rules Of The Game

The relationships between family firms and their institutional contexts are critical to family firm legitimacy and sustainability. However, we still know little about how these relationships influence firm behavior. We draw on the institutional literature—institutional logics in particular—to investigate the behavior of different types of wineries within the Okanagan region in Western Canada. We analyze how family, business, and community logics guide firm behavior, and how different combinations of logics lead firms to take action that modifies the field to support their own legitimacy and sustainability.

Do dissimilarities in the family involvement in family firms lead to different levels of indebtedness? Evidence from Spain

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
María Comino-Jurado ◽  
Sonia Sánchez-Andújar ◽  
Purificación Parrado-Martínez
Keyword(s):  
Family Involvement ◽  
Family Business ◽  
Design Methodology ◽  
Family Firms ◽  
Governance Structure ◽  
Three Dimensions ◽  
Content Type ◽  
The Family ◽  
Family Business Group ◽  
Different Levels

PurposeThis paper examines how differences in the family involvement in a family business can influence its level of indebtedness. Assuming the influence of family is not the same for all family firms, we consider each company as a combination of the family involvement in three dimensions of the business: ownership, management and governance structure.Design/methodology/approachUsing the partial least squares technique allows us to address the heterogeneity of family firms through an integral concept of family involvement in business that jointly considers the level of family participation in the ownership, management and governance structure of each firm.FindingsOur results demonstrate that the level of family involvement in a family firm, considering the heterogeneity existing within the family business group, directly influences its level of indebtedness. In addition, we find that family involvement in ownership and governance structures individually considered are positively related to the level of indebtedness of the family business.Originality/valueOur findings prove that some indebtedness patterns, which previous literature has described as common to all Spanish family businesses, may actually be valid only for specific family firms with a particular level of family involvement. In addition, the way of measuring family business heterogeneity through our integral concept of family involvement can be replicated by other authors because of the manageability of the items, thus contributing to an increased understanding of the effects of family involvement in firms' development.

Socioemotional Wealth in Family Firms

2012 ◽  
Vol 25 (3) ◽  
pp. 258-279 ◽  
Author(s):  
Pascual Berrone ◽  
Cristina Cruz ◽  
Luis R. Gomez-Mejia
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Family Firm ◽  
Socioemotional Wealth ◽  
Future Studies ◽  
Theoretical Approaches ◽  
The Family ◽  
Different Dimensions ◽  
Dominant Paradigm

This article makes the case for the socioemotional wealth (SEW) approach as the potential dominant paradigm in the family business field. The authors argue that SEW is the most important differentiator of the family firm as a unique entity and, as such, helps explain why family firms behave distinctively. In doing so, the authors review the concept of SEW, its different dimensions, and its links with other theoretical approaches. The authors also address the issue of how to measure this construct and offer various alternatives for operationalizing it. Finally, they offer a set of topics that can be pursued in future studies using the SEW approach.

Evolutionary Psychology and Family Business: A New Synthesis for Theory, Research, and Practice

2008 ◽  
Vol 21 (1) ◽  
pp. 103-118 ◽  
Author(s):  
Nigel Nicholson
Keyword(s):  
Evolutionary Psychology ◽  
Family Business ◽  
Family Firms ◽  
Family Firm ◽  
Unique Contribution ◽  
Performance Potential ◽  
New Synthesis ◽  
Theoretical Synthesis ◽  
The Family ◽  
Theory Research

The article seeks to show that the ideas of evolutionary psychology have not only a unique contribution to make to the study of family business but have an overarching capacity to integrate theory, resolve empirical debates, and lead research in new directions. The article considers, first, what is different about family firms before outlining the Darwinian framework and its implications, and then moves on to an analysis of kinship dynamics as central to understanding the roots of cooperation and conflict in the family firm. The article concludes with a discussion of the scope for theoretical synthesis, practical implications, and the position this analysis leads us to about the unique performance potential and liabilities of the family firm.

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